Mumbai: India’s most valuable company Reliance Industries Ltd (RIL) on Friday beat investor and analyst expectations for the second quarter in a row with a 24% increase in net profit to Rs.5,502 crore and a 10.1% rise in revenue to Rs.96,307 crore in the three months ended 31 December.

RIL’s profit had been estimated to increase 14.4% year-on-year to Rs.5,079 crore on a 6.45% rise in revenue to Rs.90,622 crore during the same period, according to analysts’ estimates compiled by Bloomberg.

The oil-to-yarn and retail conglomerate posted a 1.7% sequential rise in profit—another surprise—when most analysts had estimated a decline due to global weakness in the crude refining business. On a trailing quarter basis, RIL’s revenue was up 3.3%.

On Friday, RIL’s share price rose 1.05% on BSE to close at Rs.898.95 while the benchmark index, the Sensex, gained 0.38% to 20,039.04 points. The results were declared after market hours.

At 8.00pm (India time), RIL’s global depository receipts listed on the London Stock Exchange were trading at $34.55 apiece (around Rs.1,862), up 5.46%, while the benchmark FTSE was up 0.61%.

The better-than-anticipated performance was largely a result of robust operating profit margins registered by RIL’s two key businesses—crude refining and marketing, and petrochemicals.

“RIL’s performance has improved in this quarter with margin expansion in petrochemicals and record earnings in the refining business,” RIL chairman Mukesh Ambani said in a statement. “We are investing over Rs.100,000 crore by expanding our petrochemical capacities and adding value to our refining business. These investments will secure a significant change in RIL’s earning capacity on commissioning of these projects.”

The planned investment in its core businesses has also meant that non-operating income earned from treasury operations have played a reduced role in the company’s overall profitability.

The Street has been consistently concerned about the high proportion of other income (earnings from non-core business) in RIL’s pre-tax profits. In the same quarter last fiscal, other income accounted for 30% of pre-tax profit. This proportion was down to 25.4% in the December 2012 quarter.

In absolute terms, too, RIL’s other income has fallen from Rs.2,112 crore in the July-September quarter to Rs.1,717 crore in the October-December period.

“It seems that finally the leader is back after a gestation period of three-four years and it’s good to see that operational performance is driving RIL’s overall earnings,” said Jagannadham Thunuguntla, head of research at SMC Global Securities Ltd.

Whereas most analysts estimated RIL’s gross refining margin (GRM)—the difference between the value of petroleum products sold and the cost of processing crude—to come in at $8.5 per barrel for the quarter, the actual GRM reported was much higher at $9.6 per barrel. This was 41% higher than a year earlier.

Analysts had expected RIL’s GRM to follow the direction of the benchmark Singapore GRM, which dipped during the quarter due to increased supply from refineries returning from maintenance and seasonally low demand.

But RIL bucked the trend with “quarterly strength in naphtha (margins), product slate flexibility, and crude sourcing advantages” that delivered its highest GRM for any quarter in the fiscal.

On a year-on-year basis, the 114.5% jump in operating profit from the refining business to Rs.3,615 crore was a boost for RIL’s December quarter earnings. This was the company’s highest-ever quarterly earnings before interest and tax (Ebit) from the refining business. The business yielded revenue of Rs.86,641 crore.

The refining business benefited from higher naphtha margins, which RIL explained was due to higher demand from petrochemical producers, especially in China, along with a greater differential between lighter (purer and more expensive) and heavier (impure and cheaper) grades of crude. Since RIL operates one of the most complex refineries in the world at Jamnagar in Gujarat, it is able to use heavier crude to yield the same product slate at a lower cost.

An improved sequential performance by RIL’s petrochemicals business helped the company post a minor net profit rise in the December quarter over the preceding three months, while analysts had estimated a quarter-on-quarter drop.

Margins from the petrochemicals segment rose 8.8% from 7.9% in the September quarter. Operating profit from the business improved 11.3% to Rs.1,937 crore, while revenue remained flat at Rs.22,053 crore. On a year-on-year basis, however, petrochemicals revenue rose 11.5%, while operating profit fell 10.2%.

RIL cited strength in domestic demand and consumption for polyester and polymer products as the reason for the petrochemicals division’s strong performance.

At the end of December, the company had oustanding debt of Rs.72,266 crore. Its cash and cash equivalents added up to Rs.80,962 crore.

“The cash sitting on RIL’s books is an irreplaceable asset, especially now that there are signs of turnaround in the economy,” Thunuguntla said. “It can gear up to make significant investment in existing and new businesses such as telecom and retail.”

RIL’s retail venture posted 44% growth in revenue to Rs.7,749 crore for the nine months ended 31 December as compared with a year ago, the company statement said. “Same-store sales growth ranged from 10% to 25% across formats,” it added. Same-store sales measure growth at outlets open for at least one year.

The company’s oil and gas exploration and production business continued to be a laggard due to the effect of falling gas output from RIL’s D6 gas field in the Krishna-Godavari basin. During the December quarter, revenue from the business fell 32.2% year-on-year to Rs.1,921 crore and operating profit declined 54.4% to Rs.590 crore.